Soybean prices are likely to come under pressure despite a marginal decline in acreage. Yield from the standing crop is estimated to be higher due to better soil moisture.
Area under soybean is seen marginally lower in the key state of Madhya Pradesh but higher than the five-year average. The recovery of palm oil production in Indonesia and Malaysia after a decline last year due to dry conditions from the El Nino weather pattern could also add pressure. India is the world’s biggest buyer of vegetable oil, importing nearly 55-60 % of its annual consumption.
Madhya Pradesh and western Maharashtra are the country’s two top soybean producers, accounting for over 85 % of total output. According to a report by broking firm Angel Commodities based on data provided by the ministry of agriculture, the area under the soybean crop across the country was at 114.7 lakh hectares, down marginally by 1.3% compared with last year’s data. “The fall in acreage is primarily due to less sowing in MP, the country’s top soybean producer. Soybean acreage in Gujarat, Telangana and Maharashtra increased this year due to widespread rains this monsoon,”Angel sources said.
TP Vinod , analyst at Geofin Comtrade, feels that it is a bearish market given the fundamentals of good crop arrival expected soon and good global production of edible seeds. “Yield is expected to increase due to the higher moisture content of the soil compared to past years. The market is likely to face pressure as arrivals increase in the terminal market,” he added.
Soybean on the National Commodities and Derivative Exchange (NCDEX) has seen a downtrend during the sowing season on good sowing progress of soybean in Madhya Pradesh, Maharashtra and Rajasthan. On Tuesday evening, spot price at the NCDEX counter closed down at R3,499 per quintal at Nagpur. The prices have slipped about 24% after touching its highest levels of R4,290 per quintal in April 2016.
According to data released by the Solvent Extractors’ Association of India, India’s edible oil imports fell 8.4% to 1.25 million tonne (mt) in August, while cumulative imports in the first 10 months of the current oil year that started November rose 4.0% to 12.04 mt. High stock at ports and in the supply chain has slowed the pace of edible oil imports into India. India buys palm oil from Indonesia and Malaysia and soybean oil from the US, Brazil and Argentina.
Angel reports that global soybean production for 2016-17 expected to be about 330.4 mt, an increase of about 7 % year on year, according to the latest September USDA report. The top soybean producing countries in the world are the US, Brazil, Argentina, China and India. In the current year, production is estimated to increase in all the top producing countries with the production in the US, China and Brazil forecasted to increase by 7%.